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ERCOT might require, and pay, EFH to run coal plants slated to idle for the winter


Energy Future Holdings recently gave notice it will idle two coal-fired power units this winter because wholesale power prices are too low to turn a profit. But the electricity grid operator is considering paying the company to run the plants anyhow.

ERCOT gave notice on Wednesday it is considering entering into a so-called reliability must-run contract with EFH’s generating business, Luminant, concerning the two units at the Monticello plant in East Texas.

“What we’re looking at really is whether these units are needed for transmission reliability,” said ERCOT spokeswoman Robbie Searcy. That is, the agency is studying whether it needs the generating units to stay on to keep the power lines running properly.

Power lines must maintain a certain frequency or risk damaging power plants and causing outages. ERCOT will decide at the end of October whether EFH must keep the plants humming.

The Sierra Club, which campaigns against using coal as fuel, accused Luminant of strategically idling the plants in order to get the reliability must-run contract. The group called the contract a “ratepayer-funded bailout.”

EFH spokesman Allan Koenig said the company didn’t apply for the reliability must-run contract. Instead, ERCOT determines whether it needs to make such contracts.

“We are going through the same process as any other generator would, and we are working with ERCOT as needed. As we have said all along, we will have Monticello 1 and 2 available during peak demand season” next summer, Koenig said in an email.

EFH has been considering idling the Monticello units for some time. When the Environmental Protection Agency implemented a rule designed to prevent pollution that crosses state lines, EFH said it would have to shut down the Monticello units, as well as some coal mines, to comply. A court knocked down the EPA rule.

But EFH still chose to idle the plants for six or seven months this winter because current low wholesale power prices were affecting profit at the generators.

Luminant chief executive David Campbell said on the sidelines of a conference last weekend he doesn’t expect to make a decision about idling other coal plants until summer. At that time, he could decide to idle the Monticello units for the winter of 2013 and 2014, or other coal units, or none at all, depending on wholesale power prices.